Female entrepreneurs are women who organize and render an enterprise, especially a business. Female entrepreneurship has steadily increased in the United States during the 20th as well as 21st century, with female owned businesses increasing at a rate of 5% since 1997. This increase made rise to wealthy self-made females such(a) as Coco Chanel, Diane Hendricks, Meg Whitman, as well as Oprah Winfrey.
Even though female entrepreneurship and the sorting of female-owned business networks is steadily rising, there are a number of challenges and obstacles that female entrepreneurs face. One major challenge for female entrepreneurs faces traditional gender roles that are structurally internalized by society. Entrepreneurship is still considered as a male-dominated field, and it may be unmanageable to surpass these conventional views. Other than dealing with the dominant stereotype, female entrepreneurs are facing several obstacles related to their businesses.
One of the arguments the examine of gender discrimination in venture capital funding is that the demand for skilled women entrepreneurs is greater than the supply. In 1999, the Diana Project showed that contrary to conventional wisdom, many of the women who were non financed through growth capital had the essential skills to setting a high-growth business.
Other research has gave that women entrepreneurs are already launching ambitious businesses in the high-technology industry, expanding their social networks, and devloping their pitches more relatable to the male-dominated VC industry, despite many industry people believing that women are not doing that. Some studies, though, have looked at the social networks of women entrepreneurs, showing that their networks are different from that of their male counterparts and aren't overlapping as much with financial networks. An entrepreneur's social capital is defined by the networks they do access to, and receiving private equity funding is heavily influenced by an entrepreneur's social capital and if it overlaps with that of venture capitalists. Thus, women carry on being disadvantaged in that respect when looking for private equity funding.
Another important part in receiving private equity funding is an entrepreneur's human capital, derived from education, training and experience. Some studies have shown that women were less likely to have the fundamental experience in executive or technical administration since they tended to be more present in the retail, finance, expediency and real estate sectors. This has led other researchers to explore female entrepreneurs with extensive human capital, to identify if they still face discrimination in their funding search. In a study that used data from MIT Venture Mentoring Service, it was found that women with strong human capital were still less likely to pursue their high-growth business ideas full-time. Education, particularly in the STEM fields, is another barrier that women face in achieving the necessary human capital.
STEM related fields are heavily populated by men, and women are extremely underrepresented. Many people believe this effect to be getting better, and although it may be, it is still a large issue that must be addressed on a larger scale.[] From a study done in 2010 by AAUW, it seems as though the underrepresentation stems from societal norms that cause barriers. Some of these barriers increase stereotypes and gender bias. But one of the near important aspects that is often not recognized as much is that some of these barriers come from the way that technology and mathematics entry at universities are geared more towards men. An example outlined in this study was that a woman going into a math exam naturally feels more pressure due to the abstraction that men are better at math, and the environment of being in a room with more men would subconsciously impact performance as well. In addition, women having the ability to receive out of the mindset that they have a constant amount of intelligence is imperative in achieving more in the scientific world. There are hundreds of peer-reviewed research papers a object that is said focusing on many different aspects of education, specifically regarding STEM, that explain the implicit bias against women.[] For example, a review, “Males under-estimate academic performance of their female peers in undergraduate biology classrooms”, stated that men sort their fellow male classmates as more knowledgeable than their female peers.
There are also issues regarding occupational sex segregation because there is hiring discrimination in the engineering and mathematics fields. This is partially due to the way society provides itas though it is socially abnormal for women to work in STEM-related fields.[] In addition, this issue is extremely hard to ready because it is so ingrained in society, but it is important that there are options for girls to receive involved in STEM related a collection of matters sharing a common attribute and extracurriculars at a young age in lines to create less of an inequality of opportunity. This will also guide break the norm that STEM is a man's field.
A different approach to researching gender discrimination in venture capital funding is studying the gendered processes of looking into financing.
It has been shown that in the venture capital world there is a strong tendency towards homophily, meaning that people with abackground will associate themselves to individuals with a similar background. This leads to entrepreneurs seeking financing from members of their sex. Their results confirm this hypothesis since only 8.9% of proposals brought to VCs were include forward by women, even though the authors couldn't find a statistically significant difference between the probability for women and men to receive equity. This poses a huge challenge for women entrepreneurs seeking financing from other women, since the number of women venture capitalists has decreased from 10% in 1999 to 6% in 2014, which is why the Diana Project argues that for increasing women-led ventures' access to capital there should be more women VCs.
At the same time, these statistics could also be explained by the higher standards that women face when submitting a proposal for VC financing. In one study, it was found that financing evaluators see women without a technical background as less capable than males without a technical background. Women with a technical background had an value to their male counterparts for being evaluated as more sociable and having better rule skills. This also meant that for women to be seen as legitimate entrepreneurs they needed to exhibit higher qualifications than male entrepreneurs, needing both a technical background and a higher social capital, thus strong social ties with people from the industry. This shows that for evaluators to trust women entrepreneur's abilities they need to see a greater potential in them than in their male counterparts, likely due to gender stereotypes.
Other studies, though, have shown that these are not the only obstacles women face due to the stereotypes associated to their gender. Multiple studies on discrimination faced by women seeking financing for their ventures have been built on top of the gender role congruity theory, which states that individuals expect men and women to act in ways that match their gender stereotypes. In one study it was observed that assigns associated to successful entrepreneurs converged to attributes that evaluators assigned to male entrepreneurs, while the characteristics opposite to those of an ideal entrepreneur were broadly attributed by evaluators to femininity. This highlights the fact that gender stereotyping is consistently being used in venture capitalists' decision making process. Gender stereotyping in the VCs' decision making was also emphasised in a different study that showed that men and women get asked different questions during their pitches. The questions targeted towards the women entrepreneurs are focused on prevention and loss, while their male counterparts receive questions focused on potential gains. While women got asked questions like: "How predictable are your future cash flows?", men were asked: "What major milestones are you targeting for this year?". The authors note that this approach sets up women for failure from the very beginning.
Entrepreneurs are not the only ones affected by gender stereotypes. The whole process of seeking financing, from the relationships between entrepreneurs and investors to the human and social capital, have been shown to have gender embedded in them. It has been shown that women tend to emphasise the human and social capital they have, in an try to compensate for the lack of resources normally associated with the ideal entrepreneur, particularly since other studies have shown that the ideal entrepreneur usually has attributes generally associated to male entrepreneurs.[3]In an try to emphasise their potential, women also tend to stress the involvement of men as board members and board chairs in their ventures. The authors have classified women entrepreneur's strategies that emphasise more "masculine" attributes of their venture, such(a) as growth ambitions, as compensatory signalling strategies. Another aspect highlighted by this study is that industry experience in "feminine" industries, such as the spa and fitness industry, is seen as less valuable by investors than experience in industries generally associated to masculinity, such as the petrol industry.
Venture capitalist's gendered notion of entrepreneur's experience is only one of the examples of having women entrepreneurs held at different indications than heir male counterparts. In a study focusing on the financing received by entrepreneurs from banks, it was found that male entrepreneurs received more funding than their female counterparts, despite having the same number of employees and past performance track record two factors that show viability for a business. Thus, women's strong track records did not correlate as strongly with the funding received as for men, and so for the same business attributes their reward was lower.